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Stocks Waver Amid Concerns Over Recovery: Live Updates Stocks Waver Amid Concerns Over Recovery: Live Updates
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Randal K. Quarles, the Federal Reserve’s vice chair for banking supervision, said the central bank’s lending programs for midsize businesses and municipalities should be coming soon as the central bank tries to balance effectiveness and speed. The United States recorded its largest monthly deficit in history in April as the government began funneling billions of dollars of stimulus funds to cushion the economy from the coronavirus pandemic.
“I don’t think we’re looking at months, but it would be premature for me to say how many weeks it would be before they’re operational,” Mr. Quarles said during testimony before the Senate Banking Committee on Tuesday. The Treasury Department said on Tuesday that the budget deficit surged to $738 billion last month as the Trump administration deferred tax payments that normally come due in April to mid-July and sent millions of Americans economic relief payments. It was the largest shortfall of any month on record and the deficit for the fiscal year to date topped $1.4 trillion.
Lawmakers grilled Mr. Quarles over several topics at the hearing, including why the Fed is still allowing banks to pay dividends and whether the central bank is willing to take enough risks to help shore up the economy. The figures show the breadth of the fiscal measures that the government has been taking to support a cratering economy and the deep debt burden that it will be facing as the economy recovers. A Treasury official outlining the release of the date called the numbers “striking.”
Much of the questioning centered on when the Fed’s Main Street and Municipal Liquidity Facility will get up and running. The programs were first announced in late March and early April, but have yet to get underway, as the Fed takes time to design and implement efforts they have never tried before. Senators also pushed the Fed to expand its facilities to better serve certain groups — whether that be small cities or groups of middle-market companies — underlining how fraught the design of those programs is proving. The Congressional Budget Office projected last month that the federal budget deficit would hit $3.7 trillion for the 2020 fiscal year, which would be its largest size as a share of the economy since World War II.
“It is the highest priority at the Fed right now, is to get the Main Street and Municipal facilities operational,” Mr. Quarles said. “Because those are innovations, that it is taking time.” Much of the decline in government receipts last month was because of the three-month delay of Tax Day to July 15, while a large proportion of the increase in spending was reflected in the economic impact payments and in additional health care spending. April usually yields a surplus. The largest deficit for the month previously came in 2010.
Although Republicans have been increasingly expressing worry about the deficit, it is likely that more government spending is in store. And most economists argue that the massive spending is necessary to prevent the severe economic downturn from becoming even worse. House Democrats released on Tuesday released a proposal for another $3 trillion economic relief bill.
The Federal Reserve on Tuesday announced additional details on one of its yet-to-open emergency lending facilities, adding that it will provide detailed public disclosures on who is tapping the program.
The so-called Term Asset-Backed Securities Loan Facility, or TALF, will accept bundles of debt backed by a variety of consumer and business debt, including auto loans, student loans, and leveraged loans, as collateral in exchange for loans. The goal is to keep credit markets functioning smoothly.
The Fed did not provide a start date for the program, which was first announced on March 23. It also announced that both the TALF and its Paycheck Protection Program lending facility — which takes small-business loans off bank balance sheets — would provide detailed monthly releases on usage.
“The New York Fed must obtain evidence that participants in the TALF are unable to secure adequate credit accommodations from other banking institutions,” an information sheet said, making it clear that the program would serve as a backstop.
The Fed Board would disclose the name of each participant, amounts borrowed, interest rate charged, value of pledged collateral and costs, revenues and fees for the programs, it said.
Uber is in talks to acquire Grubhub, said two people with knowledge of the discussions, aiming to create one giant player in food delivery as more people turn toward those services in the coronavirus pandemic.Uber is in talks to acquire Grubhub, said two people with knowledge of the discussions, aiming to create one giant player in food delivery as more people turn toward those services in the coronavirus pandemic.
It was unclear how advanced the discussions were and whether a deal would come together, said the people, who spoke on the condition of anonymity because the talks were confidential.It was unclear how advanced the discussions were and whether a deal would come together, said the people, who spoke on the condition of anonymity because the talks were confidential.
Representatives from Uber and Grubhub declined to comment. Bloomberg earlier reported the talks.Representatives from Uber and Grubhub declined to comment. Bloomberg earlier reported the talks.
The discussions are a sign of how the companies are working to capitalize on people’s shifting behavior. With consumers staying home and many restaurants across the country shut down, more people are turning to food deliveries for meals.The discussions are a sign of how the companies are working to capitalize on people’s shifting behavior. With consumers staying home and many restaurants across the country shut down, more people are turning to food deliveries for meals.
But the discussions are also an attempt by Uber to limit damage to its business and find a new path for growth.But the discussions are also an attempt by Uber to limit damage to its business and find a new path for growth.
President Trump said California should allow Tesla to restart its electric car factory in the San Francisco Bay Area “NOW.” His remark came a day after the company’s chief executive, Elon Musk, said he was resuming production in violation of a local order prohibiting him from doing so.President Trump said California should allow Tesla to restart its electric car factory in the San Francisco Bay Area “NOW.” His remark came a day after the company’s chief executive, Elon Musk, said he was resuming production in violation of a local order prohibiting him from doing so.
Mr. Trump’s comments are in keeping with his effort to push state and local officials to allow businesses to reopen despite the advice of public health officials, who have called for a more gradual reopening to prevent a spike in coronavirus cases and deaths. Mr. Trump’s comments are in keeping with his effort to push state and local officials to allow businesses to reopen despite the advice of public health officials, who have called for a more gradual reopening to prevent a surge in coronavirus cases and deaths.
But it is not clear what effect the president’s statement would have on Gov. Gavin Newsom, a Democrat, and county officials, most of whom are also Democrats. In addition, the Tesla factory in Fremont, Calif., already appears to be making cars and Mr. Musk has dared local officials to arrest him. But it is not clear what effect the president’s statement would have on California’s governor, Gavin Newsom, a Democrat, and county officials, most of whom are also Democrats. In addition, the Tesla factory in Fremont, Calif., already appears to be making cars and Mr. Musk has dared local officials to arrest him.
“Tesla is restarting production today against Alameda County rules,” he announced on Twitter on Monday. “I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.”“Tesla is restarting production today against Alameda County rules,” he announced on Twitter on Monday. “I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.”
The county’s health officer has said he hoped to work out an agreement with Tesla to open the plant on May 18. The plant is Tesla’s main source of revenue and has been closed since early April. County officials have not yet authorized the resumption of indoor manufacturing over fears that the coronavirus could spread among large groups working in proximity.The county’s health officer has said he hoped to work out an agreement with Tesla to open the plant on May 18. The plant is Tesla’s main source of revenue and has been closed since early April. County officials have not yet authorized the resumption of indoor manufacturing over fears that the coronavirus could spread among large groups working in proximity.
In an email that was sent on Monday and was reviewed by The New York Times, the company’s head of human resources in North America, Valerie Workman, told employees they would be contacted within 24 hours about when to report for work.In an email that was sent on Monday and was reviewed by The New York Times, the company’s head of human resources in North America, Valerie Workman, told employees they would be contacted within 24 hours about when to report for work.
The state has authorized a resumption of manufacturing, Mr. Newsom said Monday, but that “we recognize localism” and “if a county doesn’t want to go as far,” local orders would prevail.The state has authorized a resumption of manufacturing, Mr. Newsom said Monday, but that “we recognize localism” and “if a county doesn’t want to go as far,” local orders would prevail.
In her email, Ms. Workman said employees who were uncomfortable returning to work could stay home on unpaid leave.In her email, Ms. Workman said employees who were uncomfortable returning to work could stay home on unpaid leave.
The Federal Reserve will make its first-ever foray into corporate bond markets on Tuesday, buying exchange traded funds, or E.T.F.s, which trade like stock and provide broad exposure to company debt. Randal K. Quarles, the Federal Reserve’s vice chair for banking supervision, said the central bank’s lending programs for midsize businesses and municipalities should be coming soon as the central bank tries to balance effectiveness and speed.
The Fed, which initially announced on March 23 that it would start buying corporate debt, has said that it will purchase newly issued investment grade bonds and those that trade on the secondary market. It will buy the debt of recently downgraded companies and will tiptoe into junk bonds more broadly via E.T.F.s. “I don’t think we’re looking at months, but it would be premature for me to say how many weeks it would be before they’re operational,” Mr. Quarles said during testimony before the Senate Banking Committee on Tuesday.
Outright corporate bond buying will start “in the near future,” the Federal Reserve Bank of New York said Monday night. While the Fed bought short-term corporate debt known as commercial paper during the 2008 financial crisis, buying longer-dated debt is new territory for America’s central bank. Lawmakers grilled Mr. Quarles over several topics at the hearing, including why the Fed is still allowing banks to pay dividends and whether the central bank is willing to take enough risks to help shore up the economy.
Both the primary- and secondary-market bond buying programs exist as part of the Fed’s emergency lending authorities, which can keep credit flowing in the economy during times of crisis. While the central bank has rolled out several emergency programs since coronavirus lockdowns began, this will be the first one backed by new congressional funding to get up and running. Much of the questioning centered on when the Fed’s Main Street and Municipal Liquidity Facility will get up and running. The programs were first announced in late March and early April, but have yet to get underway, as the Fed takes time to design and put in place efforts they have never tried before. Senators also pushed the Fed to expand its facilities to better serve certain groups — whether that be small cities or groups of middle-market companies — underlining how fraught the design of those programs is proving.
“It is the highest priority at the Fed right now, is to get the Main Street and Municipal facilities operational,” Mr. Quarles said. “Because those are innovations, that it is taking time.”
The Federal Reserve will make its first foray into corporate bond markets on Tuesday, buying exchange-traded funds, which trade like stocks and provide broad exposure to company debt.
The Fed, which announced on March 23 that it would start buying corporate debt, has said that it will purchase newly issued investment grade bonds and those that trade on the secondary market. It will buy the debt of recently downgraded companies and will tiptoe into junk bonds more broadly via E.T.F.s.
Outright corporate bond buying will start “in the near future,” the Federal Reserve Bank of New York said Monday night. The Fed bought short-term corporate debt known as commercial paper during the 2008 financial crisis, but buying longer-dated debt is new territory for the central bank.
Both the primary- and secondary-market bond-buying programs exist as part of the Fed’s emergency lending authorities, which can keep credit flowing in the economy during times of crisis. The central bank has rolled out several emergency programs since coronavirus lockdowns began, but this will be the first one backed by new congressional funding to get up and running.
Lawmakers earmarked $454 billion for such programs as part of the so-called CARES package, which President Trump signed at the end of March. The Treasury administers those funds, and must sign off on the Fed’s facilities.Lawmakers earmarked $454 billion for such programs as part of the so-called CARES package, which President Trump signed at the end of March. The Treasury administers those funds, and must sign off on the Fed’s facilities.
Saudi Aramco, the world’s largest oil company, reported Tuesday that its net income fell by 25 percent in the first quarter of 2020 compared with a year earlier. Still, Aramco said it earned $16.7 billion — an amount that may allow it to retain the title of world’s most profitable company.Saudi Aramco, the world’s largest oil company, reported Tuesday that its net income fell by 25 percent in the first quarter of 2020 compared with a year earlier. Still, Aramco said it earned $16.7 billion — an amount that may allow it to retain the title of world’s most profitable company.
Amin H. Nasser, the company’s president and chief executive, said in a statement that the coronavirus pandemic “impacted” the results, which he called “exceptionally strong” given the situation. The pandemic has sharply reduced the world’s demand for oil, lowering prices. The Saudi government, which owns about 98 percent of Aramco’s shares, contributed to the falls by starting a price war with Russia in March. Amin H. Nasser, the company’s president and chief executive, said in a statement that the coronavirus pandemic “impacted” the results, which he called “exceptionally strong” given the situation. The pandemic has sharply reduced the world’s demand for oil, lowering prices. The Saudi government, which owns about 98 percent of Aramco’s shares, contributed to the falling prices by starting a price war with Russia in March.
Aramco’s earnings are almost certain to fall further in the current quarter and later in the year. Aramco said that it received an average of $51.80 a barrel for its oil in the January-March period. Oil prices, which will largely determine Aramco’s earnings, have since fallen much farther. Aramco’s earnings are almost certain to fall further in the current quarter and later in the year. Aramco said that it received an average of $51.80 a barrel for its oil in the January-March period. Oil prices, which will largely determine Aramco’s earnings, have since fallen much further.
Output, another key factor, is also likely to be lower. In an effort to bolster prices, the government said Monday that it had ordered Aramco to cut production to about 7.5 million barrels a day in June, about 25 percent below the average output for the first quarter.Output, another key factor, is also likely to be lower. In an effort to bolster prices, the government said Monday that it had ordered Aramco to cut production to about 7.5 million barrels a day in June, about 25 percent below the average output for the first quarter.
The company said it would pay a dividend of $18.75 billion to shareholders for the quarter, in line with its commitment to pay out $75 billion for the year. Neil Beveridge, an analyst at Bernstein, a research firm, said in a note to clients that because the company was generating less cash than the dividend payment it would be “effectively borrowing to pay” shareholders. The company said it would pay a dividend of $18.75 billion to shareholders for the quarter, in line with its commitment to pay out $75 billion for the year. Neil Beveridge, an analyst at Bernstein, a research firm, said in a note to clients that because the company was generating less cash than the dividend payment, it would be “effectively borrowing to pay” shareholders.
U.S. stocks were flat and global markets mixed on Tuesday as reports from China, South Korea and the United States offered sobering reminders to investors of how long and difficult the coronavirus recovery is likely to be.U.S. stocks were flat and global markets mixed on Tuesday as reports from China, South Korea and the United States offered sobering reminders to investors of how long and difficult the coronavirus recovery is likely to be.
The S&P 500 rose about half a percent in early trading before paring gains. European markets were broadly higher after a drop in the Asia-Pacific region.The S&P 500 rose about half a percent in early trading before paring gains. European markets were broadly higher after a drop in the Asia-Pacific region.
Investors had reasons for concern. Dr. Anthony S. Fauci, a central figure in the U.S. government’s coronavirus response, was expected to warn lawmakers on Tuesday that “needless suffering and death” would result if the country opened up too quickly. In China, the city of Wuhan, which seemed to have tamed its outbreak, has reported six new infections in recent days, while cases have also risen in the northern part of the country.Investors had reasons for concern. Dr. Anthony S. Fauci, a central figure in the U.S. government’s coronavirus response, was expected to warn lawmakers on Tuesday that “needless suffering and death” would result if the country opened up too quickly. In China, the city of Wuhan, which seemed to have tamed its outbreak, has reported six new infections in recent days, while cases have also risen in the northern part of the country.
And fresh data on consumer prices was released, showing that the Labor Department’s index fell 0.8 percent in April, the largest monthly decline since December 2008. The index was weighed down by the collapse in oil prices as airlines canceled flights and drivers stayed home.And fresh data on consumer prices was released, showing that the Labor Department’s index fell 0.8 percent in April, the largest monthly decline since December 2008. The index was weighed down by the collapse in oil prices as airlines canceled flights and drivers stayed home.
Oil prices rose slightly on Tuesday, after Saudi Arabia said it had instructed Saudi Aramco, the world’s largest oil company, to deepen production cuts to help with the world’s glut of crude. Brent, the international benchmark, was up about 1 percent, to over $30 a barrel. West Texas Intermediate, the U.S. standard, was up more than 4 percent, to a little over $25.60 a barrel. Oil prices rose slightly on Tuesday, after Saudi Arabia said it had instructed Saudi Aramco, the world’s largest oil company, to deepen production cuts to help with the world’s glut of crude. Brent, the international benchmark, was up about 1 percent, to more than $30 a barrel. West Texas Intermediate, the U.S. standard, was up more than 4 percent, to a little more than $25.60 a barrel.
India’s carbon dioxide emissions have dropped for the first time in four decades, reflecting the impact of an economic slowdown from the coronavirus lockdown and a broader weakening of demand for fossil fuels on the subcontinent, experts say. Walmart said on Tuesday that it would give another round of bonuses to its workers in the United States: $300 for full-time workers and $150 for part-time and temporary workers, for a total of more than $390 million. The retailer said it had committed more than $935 million in bonuses for its workers so far this year.
Researchers at Carbon Brief, an environmental website that tracks climate and energy policy, found that emissions fell around 15 percent in March and likely dropped another 30 percent in April.
Lower electricity consumption during a nationwide lockdown, which started in March, along with a surge in competition among renewable energy sources, has cut demand for thermal power. India is one of the largest emitters of greenhouse gases on the planet.
Coal-fired power generation, which is linked with higher air pollution, fell 31 percent in the first three weeks of April, according to government data compiled by Carbon Brief. The supply of energy from renewables remained relatively stable during the lockdown, rising about 6 percent in March and dropping only slightly in April.
Elliott Management, the $40 billion hedge fund run by the billionaire Paul E. Singer, on Tuesday escalated a campaign to shake up the drug maker Alexion Pharmaceuticals.
In a letter sent to Alexion’s board, Elliott called on the company, which specializes in treatments for rare disorders, to put itself up for sale to improve its stock price. The demand was spurred by Alexion announcing last week that it planned to buy Portola, a maker of potential blood-disorder treatments, for $1.4 billion.
The moves show a bucking of two trends in the deal community during the coronavirus pandemic. Activist shareholders have been relatively quiet in recent months, and companies have largely shied away from takeovers.
That Alexion would attempt a major acquisition — one that investors and analysts questioned, with the drugmaker’s stock price tumbling after it was announced — at an inopportune time forced Elliott to act, the hedge fund wrote. Elliott has called for changes at Alexion since late 2017, including additions to its board. But in December, the company rejected what it said was Elliott’s private recommendation to sell itself.
Three months after the Chinese authorities virtually shut down the country to stop the outbreak, its workers are back at their jobs. If factories and offices can successfully restart without major infections, China’s approach could serve as a model for President Trump and other leaders who want to get their economies back on track.
Major companies are asking workers to change their daily personal habits as well as their workplace conduct. BMW workers take their own temperature three times a day. Foxconn, the Taiwanese electronics giant that makes iPhones and other Western-branded gear in vast Chinese factories, has advised employees in a handout to avoid public transportation and walk, bike or drive instead.
Many employers have embraced government-endorsed health code functions recently built into some of China’s most popular smartphone apps, like Alipay and WeChat. One of the first services built to gauge a person’s infection risk, the health code function tracks users’ travel to see whether they have been to areas with high infections, though the creators and the Chinese government have not disclosed full details about how it works. When prompted by health workers, police officers or security personnel, a person would display a code colored red, yellow or green.
The theatrical distribution company Solstice Studios said Tuesday that it would release the thriller “Unhinged,” which stars Russell Crowe, in theaters nationwide on July 1. That’s two weeks before Warner Bros. release date for Christopher Nolan’s “Tenet” and three weeks before Disney’s planned release of “Mulan.” Mark Gill, Solstice’s president and chief executive, said the company polled moviegoers to see if they were ready to return to cinemas, and 80 percent said they were.The theatrical distribution company Solstice Studios said Tuesday that it would release the thriller “Unhinged,” which stars Russell Crowe, in theaters nationwide on July 1. That’s two weeks before Warner Bros. release date for Christopher Nolan’s “Tenet” and three weeks before Disney’s planned release of “Mulan.” Mark Gill, Solstice’s president and chief executive, said the company polled moviegoers to see if they were ready to return to cinemas, and 80 percent said they were.
The Transportation Department warned airlines for a second time on Tuesday that they must refund passengers for canceled tickets after receiving about 20,000 consumer complaints in April, up from the 1,500 it receives in a typical month. Industry representatives have warned that issuing refunds instead of vouchers for future travel could bankrupt some airlines.The Transportation Department warned airlines for a second time on Tuesday that they must refund passengers for canceled tickets after receiving about 20,000 consumer complaints in April, up from the 1,500 it receives in a typical month. Industry representatives have warned that issuing refunds instead of vouchers for future travel could bankrupt some airlines.
The Japanese automaker Toyota said on Tuesday that it expected a nearly 80 percent decline in operating profit next year as the coronavirus craters global demand for vehicles, potentially driving down the company’s sales by as much as 20 percent. In its annual earnings report, the company said it expected operating profit to drop 79.5 percent to 500 billion yen in the fiscal year ending March 2021.The Japanese automaker Toyota said on Tuesday that it expected a nearly 80 percent decline in operating profit next year as the coronavirus craters global demand for vehicles, potentially driving down the company’s sales by as much as 20 percent. In its annual earnings report, the company said it expected operating profit to drop 79.5 percent to 500 billion yen in the fiscal year ending March 2021.
Ryanair, Europe’s largest low-cost carrier, said it would resume 40 percent of its flight network beginning July 1, and institute safety measures like requiring passengers to wear face masks and to request access to the bathroom to prevent lines in the aisles.Ryanair, Europe’s largest low-cost carrier, said it would resume 40 percent of its flight network beginning July 1, and institute safety measures like requiring passengers to wear face masks and to request access to the bathroom to prevent lines in the aisles.
Reporting was contributed by Jeanna Smialek, Ben Dooley, Kate Conger, Mike Isaac, Michael J. de la Merced, Kai Schultz, Geneva Abdul, Stanley Reed, Niraj Chokshi, Alexandra Stevenson, Cao Li, Damien Cave, Matt Phillips, Gregory Schmidt, Carlos Tejada, Daniel Victor, Katie Robertson and Kevin Granville. Reporting was contributed by Jeanna Smialek, Ben Dooley, Alan Rappeport, Kate Conger, Mike Isaac, Michael J. de la Merced, Kai Schultz, Geneva Abdul, Stanley Reed, Niraj Chokshi, Alexandra Stevenson, Cao Li, Damien Cave, Matt Phillips, Gregory Schmidt, Carlos Tejada, Daniel Victor, Katie Robertson and Kevin Granville.